How to Step Up During the Downturn

Welcome to 2009. Really.

Last year ushered in a severe economic downturn and the people and companies in the technology sector were not immune. As this new year begins, difficult choices surround us. But it’s not all doom and gloom.

Let's kick off 2009 with caution, but let’s not forget optimism.

Remember this: In every downturn, there are companies that thrive. They defy market conditions and emerge from the economic forge more focused and ready for the new opportunities arising from tumultuous business conditions.

In our 16 years serving information technology, software and semiconductor companies, McBru has seen more than one industry downturn. Thinking back to 2001 in particular is not pleasant. Yet each time, we learned practical lessons that the agency and its clients used to come back better and smarter.

Let me share some with you.

Sharpen Your Pencil

No list of suggestions is credible if it omits the need to control expenses. So let’s get that out of the way.

Look to eliminate all unessential spending. What is essential depends on your company‘s business objectives and corporate risk profile. Are you setting growth objectives of 20 percent or more and looking to seize market share from weakened competitors? Are you in survival mode, looking for ways to stop the flood of red ink? If the former is true, try to leave marketing budgets at least at 2008 levels, and for those high rollers in the crowd, any extra funds you can allot will go a long way.

For those in more difficult financial straits, I recommend that you maintain the activities that satisfy today's customers and your most promising, immediate opportunities. It is less expensive to grow your business through happy customers than it is to acquire new ones.

What efforts are essential to keeping your current customers happy? How do they define the value in your products?

Defer longer-term development if necessary so you can roll out the new features and services that will help your customers (and your revenues) today.

Believe You Can

Cutting back can be a dispiriting exercise. But it is extremely important for you to maintain optimism, if not enthusiasm, for your business.

Anxiety is a powerful detriment to productivity and imagination. Consider this quote from the TechCrunch article "Fear Kills Business Dead": "Fear inspires desperate actions. Hope (combined with clarity and inventiveness) galvanizes action and engenders opportunities." In fact, confidence is extremely attractive to your current customers and prospects who want to associate with firms who play to win.

In short, if you believe you can, you just might.

If you believe you can't, you won't give yourself the chance.

Maintain Marketing

Since you must focus on your customer's definition of value, you can see the importance of continued investment in marketing. In fact, companies that maintain their marketing investments during a recession significantly outperform their peers.

This lesson may seem self-serving, but here are several very good reasons.

1. Your customers are looking for ways to control expenses. You must make sure they see the value in your product or service, or they will turn elsewhere for a better deal.


2. Customers prefer to buy from an industry leader. In a time of uncertainty, this conservative impulse will be even stronger. No one wants to rely on a supplier with an uncertain future. Go dark, and you will raise the question. Stay visible and vibrant, and you will increase market confidence.


3. If you simply maintain your marketing investment, your percentage of Share of Voice (SoV) will increase because the rest of the market, as a whole, is cutting back. Even better, every increase in your budget will have a disproportionately positive impact.


4. According to our experience – recently validated by Imram Kahn at JP Morgan – publishers are moving to a performance-based advertising model instead of straight CPM. Since the new model guarantees a certain number of responses, you can be more certain of meeting your program goals.


5. In fact, you will find that publishers and media properties, under financial strain just like you, are eager to meet the desires of advertisers. We use an "all-in" media buying process that helps publishers be more creative in bundling many services into one proposal, thereby expanding its impact.

In other words, in a time when your marketplace is eager for proof of value and vitality, your communications will deliver considerably more bang for your buck.

Focus on Leads – Both Acquisition and Nurturing

For your marketing investment, focus on the programs that you can trace directly to sales. This lesson is powerful for two reasons:

1. Obviously, revenue keeps the doors open and the lights on.


2. Sales impact makes the value of marketing crystal clear to executive management and your peers. It validates your wisdom in making the investment.

Marketing programs tied to sales activities are inherently measurable. When you concentrate on these programs, you can spot tactics that are the most successful, and tilt your investments to them, optimizing the impact of your scarce dollars.

Measure and Optimize: An Example

Let me recall a campaign that illustrates what I mean by measurement and optimization.

McBru assembled a broad lead generation and nurturing program for PolyServe, an IT software company that is now a division of HP. The program spanned several dimensions of opportunity and measurement:

• Multiple publishers and publishers' properties. To meet aggressive lead goals, we needed to cast the net broadly.
• Multiple assets, such as webcasts, white papers, and online demos, to serve as incentives for response.
• Multiple stages of the campaign, each one lasting a calendar quarter.

Since each publisher returned lead information along the way, the whole program was eminently measurable. The information included not just contact information, but also the property the leads were visiting, the creative elements they engaged and the assets they requested.

McBru combined the results from all publishers to maintain a bird’s eye view of the campaign. We knew which promotions, offering which assets, on which properties, were performing best.

Now here's the trick: We used PolyServe's customer relationship management (CRM) system data to tie the leads to sales conversions and ultimately revenue. To account for the average sales cycle, we analyzed each previous quarter's sales results to determine which lead "profiles" produced the most ROI. We used this knowledge to reallocate media buys and tactics for the next stage of the campaign. We drove up the percentage of preferred leads and, through the CRM data, tied the improvement to an incremental increase in sales.

Not every marketing program can show this level of accountability and constant improvement. When you look at your programs, remember the advice of a previous McBru newsletter: "Manage your lead generation programs like a sports team: Weed out the underperformers, reward the consistent achievers, and provide leadership and resources to nurture success."

Cost-Effective Awareness

If your investment is focused on lead generation and nurturing, should you forego efforts at awareness and preference? Of course not. Fortunately, there are cost-effective means to maintain those efforts at the same time.

Publishers and media companies are operating now with fewer editorial resources. Yet editorial calendars and schedules remain intact. As a result, the publishers rely more on market players like you to contribute content. Offer them technical articles, guest editorials and story ideas. A well-placed, informative story builds awareness just as well as advertising does. And while you're at it, you'll be cementing relationships with the journalists and editors.

The new Web-powered tactics may also be very cost effective. Blogs, RSS feeds, social media networks and microblogging are now gaining traction in numerous high-tech B2B industries. Many are hosted by publishers, industry groups and user organizations. Using these tools to build a dialog with your market requires time and training but little hard investment in equipment or services. You can start now, and gain exposure and influence as you learn. The upside for these tactics is that you engage your market directly, building a bridge that can help you further understand what your customers value (see lesson 1 above).

Like-Minded, Battle-Tested

Taken together, these lessons define a strategy that can help you assert leadership in your market during the recession. The strategy requires focus, tough decisions and strict accountability. To make it work, you need like-minded business partners.

In particular, make sure you work with an agency that has experience in measurement and is focused on return on investment. It must understand how to construct a dialog with customers and prospects that you can track and measure. Branding? Depending on your objectives, that may wait until next year.

On top of its measurement expertise, make sure your agency can commit to meeting clear goals. Sure, there may be some areas of negotiation. But in these times, your whole team needs to be accountable.

Finally, since your company is looking to maximize the impact of every dollar, ask your agency how it can do the same for your marketing investment. For example, we've shown time and again how our "all-in" media process gives our clients more reach in the market by giving publishers more flexibility to package their resources.

Managing your business during a recession is not for the meek. There are marketing communications agencies that have not had to guide clients through tough times. Some agencies may not even survive this downturn. Choose an agency that is battle-tested, one that can walk the walk with you and help you take advantage of the opportunities implicit in turbulent times.

Thanks for reading,

Kerry McClenahan
CEO
McClenahan Bruer Communications